Peloton Interactive, Inc. (NASDAQ: PTON) released its FY22 Q3 earnings results on Tuesday before the market closed. The PTON stock tumbled after the company missed earnings estimates and provided bleak guidance. Furthermore, McCarthy, the company’s CEO, warned shareholders that the turnaround would take time.
The company expects sales of $675 to $700 million, versus analyst estimates of $820 million, and adjusted EBITDA of -$115 million to -$120 million, versus analyst estimates of -$19 million.
At the time of writing, PTON stock was down 27% at $10.34 during early market hours.
Reported vs. Expected
EPS: -$2.27 per share vs. -$0.83 per share expected
Revenue:$964.3 Million vs. $976.12 Million expected
“We finished the quarter with $879 million in unrestricted cash and cash equivalents, which leaves us thinly capitalized for a business of our scale,”
“Turnarounds are hard work. It’s intellectually challenging, emotionally draining, physically exhausting, and all consuming. It’s a full contact sport.”McCarthy
- Total revenue for the quarter was $964.3 million, vs. $1,262.3 million in Covid-impacted Q3 FY21.
- Gross profit in Q3 was $184.2 million and 19.1% of revenue, representing a 59% year-over-year decline.
- Subscription gross profit was $252.1 million in Q3, representing 63% year-over-year growth. Subscription gross margin was 68.1%, up from 64.6% in the year-ago period, driven by continued leveraging of fixed costs.
- Total operating expense was $920.0 million and grew 101% year-over-year, representing 95.4% of total revenue versus the prior-year period of 36.3%.
- Net loss for Q3 was $(757.1) million, versus $(8.6) million in the year-ago period. Adjusted EBITDA for the quarter was $(194.0) million, versus $63.2 million in the year-ago period.
- Free cash flow (net cash provided by (used in) operating activities less capital expenditures and internal-use software development costs) was $(746.7) million, a higher outflow than anticipated.
Peloton Interactive’s most recent quarterly earnings report was released on February 8th, 2022. The reported $1.39 earnings per share for the quarter fell $0.21 short of the consensus estimate of $1.18. The company earned $1.13 billion during the quarter, compared to analysts’ expectations of $1.15 billion. Its quarterly revenue increased by 6.5% over the same period last year. Over the last year, Peloton Interactive has generated ($3.72) earnings per share ($3.72 diluted earnings per share).
Earnings for Peloton Interactive are expected to rise from $3.94 to $1.14 per share in the coming year.
Peloton is launching a major brand refresh and a new creative platform to become the most motivating brand globally. The new brand strategy emphasizes the importance of motivation in helping people fall in love with fitness, stick with it, and ultimately live better lives. In stark contrast to the rest of the fitness industry, 92% of households that join Peloton have active subscriptions 12 months later. This brand refresh includes Peloton’s first-ever tagline – Motivation That Moves You – and a new campaign featuring celebrity instructors.
Peloton Interactive makes fitness equipment. The brand’s content is available via the Peloton Bike, Peloton Tread, and Peloton Digital, which offers a full slate of fitness offerings anytime, anywhere, via IOS and Android and most tablets and computers.